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ivolga24 [154]
3 years ago
15

Pensacola Inc exchanged old equipment for new equipment in two exchange transactions. Each transaction has commercial substance

Old equipment caseBook Value Fair Value ReceiveEquipment A $73,900 $80,100 $12,400Equipment B $60,300 $55,000 $10,200For Equipment A, Pensacola would record the new equipment ata. $69,200b. $67,700c. $55,200d. $ 71,950
Business
1 answer:
vredina [299]3 years ago
4 0

Answer:

The correct option is <u>b. $67,700</u>.

Explanation:

Note: The data in the question are merged. They are therefore sorted before answering the question. See the attached pdf file for the question and the sorted data.

In accounting, when an old equipment is exchanged for a new equipment in a transaction that has commercial substance, the new equipment will be recorded at the fair value less any cash received.

Therefore, the amount at which Pensacola would record the new equipment A can be determined as follows:

<u>Particulars                                                $     </u>

Fair value of Equipment A                 80,100

Cash received                                  <u> (12,400) </u>

Amount to record equipment A    <u>  67,700  </u>

Therefore, Pensacola would record the new equipment for Equipment A at $67,700. And, the correct option is <u>b. $67,700</u>.

Download pdf
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The lower the user's switching costs:
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Answer:

more intense the competitive pressures posed by substitute products.

Explanation:

The lower the user's switching costs: the more intense the competitive pressures posed by substitute products.

Switching costs can be defined as the cost of a consumer switching from a product to a substitute good.

Therefore when such switching costs are low, it will be easier to switch from one product to another, implying that the competitive pressure from substitute goods are higher.

8 0
3 years ago
Read 2 more answers
If overhead is applied using traditional costing based on direct labor hours, the overhead application rate is:
serious [3.7K]

Answer:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Explanation:

If overhead is applied using traditional costing based on direct labor hours, the overhead application rate is:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

<u>For example:</u>

Total estimated overhead= $150,000

Allocation base= direct labor hours

Estimated Total number of direct labor hours= 10,000

Predetermined manufacturing overhead rate= 150,000/10,000

Predetermined manufacturing overhead rate= $15 per direct labor hour

5 0
3 years ago
A local county is considering purchasing some dump trucks for the trash pickups. Each truck will cost $55,000 and have an operat
lianna [129]

Answer:

35,972

Explanation:

The equivalent annual cost can be calculated dividing NPV by the annuity factor

In order to find NPV first

                                   Year1    Year2   Year3   Year4  Year5         Total

Operating and

Maintenance              18000 21000  24000  27000 30000          -

Discount factor(10%)  0.909   0.826   0.751   0.683   0.620           -

Discounted CFs          16362   17346  18024    18411   18600      88,713

Salvage                                                                          12000  

Discount factor(10%)                                                     0.620

Discounted salvage                                                      7440        (7440)

Inital Cost                   (55,000)                                                      (55,000)

NPV                                                                                                136,333

Calculation for EAC

NPV = 136,333

Annuity factor for 5 years = 3.790

Equivalent annual cost = NPV /Annuity factor

Equivalent annual cost = 136,333/3.790

Equivalent annual cost = 35,972

8 0
3 years ago
The total fixed overhead variance is:a. the difference between actual and budgeted fixed overhead costs. b. the difference betwe
kondaur [170]

Answer:

a. the difference between actual and budgeted fixed overhead costs.

Explanation:

As we know that

The variance is shows the difference between the actual amount and the budgeted amount or estimate amount

So, the total fixed overhead variance is the difference between the actual fixed overhead costs and the budgeted fixed overhead costs i.e to be fixed in nature

Hence, the first option is correct

3 0
2 years ago
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